A $150 million transformation of Wayzata's most important piece of real estate got initial approval from the City Council late Tuesday.

But the vote was close -- 3-2. And the project will come before the council again.

In giving the concept plan the OK and moving to the more detailed general plan, "The risk to the city is none," said Mayor Andrew Humphrey, who voted to approve the plan. "The risk is truly the developer's."

The Wayzata Bay Center is now a one-story strip mall that makes up two-thirds of the city's downtown retail space.

Under a plan developed by Presbyterian Homes and Services, it would become a pedestrian-friendly, high-end district featuring retail, senior and conventional housing, offices and maybe a hotel.

In supporting what he called "the most exciting project I've seen," Humphrey told the more than 130 people gathered in the Wayzata Community Church that "what we have right now is a mall. It is a sea of asphalt. We cannot forget that."

The council's approval came with conditions, including a non-binding clause that expresses concern over the project's height, which reaches five stories, and as much as 68 feet, in some spots.

Council members Mary Bader and Jack Amdal voted against the plans. Both had supported tabling the vote until the council can get more information -- including how the height could affect nearby homes and what financial risk the city might face if parts of the project failed.

"We've been told that we have to wait until the general plan stage" to get these details, Bader said. "I don't believe we should be taking things on faith."

Bader said she would vote for the concept plan if they were subject to 11 "essential conditions," which she listed, such as creating a tree-preservation plan, doing a market study for the hotel and limiting the project's height to 35 feet.

Right now, the city's ordinance regulating planned unit developments, or PUDs, restricts building heights to 35 feet. So in approving Presbyterian Homes' more detailed plans, the council would have to amend that PUD law.

Some residents, in addition to council members, said they were concerned such a change would set a precedent and more five-story buildings would follow.

"There's a reason why the 35-foot limit exists," said Dan Storms, a former resident who recently moved to Minnetonka.

But the City Attorney Bob Meller said the point of a PUD is to give the city flexibility in planning and an arbitrary height limit "really doesn't belong there."

Architects and planners for the Wayzata Bay Redevelopment Company -- the subsidiary Presbyterian Homes' created to manage the development -- have said that five stories won't seem too tall, in part because the fifth story is just 6.2 percent of the project's mass and will be hidden within the roof.

"There will be no 70-foot wall. None. Anywhere," said Dan Ionescu, of the California firm Dan Ionescu Architects and Planners.

In public hearings and council discussions, residents and officials have worried aloud about missing out on this opportunity with this developer. Two other developers have started and then stalled on this site before.

In 2004, Madison Marquette proposed a $50 million plan. United Properties followed with a $100 million plan in 2005. After scaling that project back because of the council's concerns, United Properties abandoned it, saying the reduction in density made it economically unfeasible.

The small city of 4,000 -- which many residents and officials refer to as a "village" -- is concerned that a big development will forever change its character.

"There is a need for serious compromise," said Joe McCarthy, a longtime resident.

Jenna Ross • 612-673-7168